One answer to my question "what do you mean by worse" is that the value of the dollar will fall.  I'm not sure why I'm supposed to be so excited by this.  Yes, I love my Panasonic television.  But with 90% of our production bought and sold domestically, the value of the dollar is of limited relevance to the fate of the economy, or the living standards of most Americans.  And some of our biggest trading partners seem pretty determined to stop the dollar from falling against their currency By Any Means Necessary.  I am sad that I will not be able to vacation cheaply in Europe.  But this does not seem like a good reason to urge a double-digit contraction in output.

Of course, a falling dollar also may make it harder to borrow abroad.  On the other hand, even the treasury doesn't, mostly.  Besides, the people who are intensely concerned with the dollar's exchange rate don't want us to borrow abroad, so I'm not sure why this is supposed to be more important than preventing the next Great Depression.

Currency crises are huge problems in countries where foreigners are the main source of capital, and profligate governments are forced to borrow in their own currencies.  But we are not one of those countries.

What am I missing?

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